Monthly Archives:

December 2011

European High Yield vs. Eurozone Tail Risk High Yield

As Eurozone concerns have dominated risk appetite within the market this year, a key question that faces many market participants is how to capture some of the attractive risk premiums that this weakness creates without exposing themselves unduly to the significant “tail risks” of a full blown Euro death spiral.

In this vein, a popular trade in recent months has been to add exposure to the US h…

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Explaining low government bond yields (follow up) – maybe it’s not just about Europe, it’s about China too

Yesterday I wrote a comment about how US Treasuries seemed to have decoupled from US economic data, and decided that it must be all about Europe (see here).  That could have been a slightly hasty conclusion.

Having spent the last few minutes messing around with Treasury correlations, I was surprised to find just how closely correlated US Treasury yields have been with Chinese equities since the…

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Desert Island Discs – what the bond team will be taking to the BBC radio studios, should we get the nod.

Without further comment, we give you the eight songs that each of the team would take to a desert island.  In keeping with the spirit of the radio show, we have also given them the Complete Works of the Smiths, and a copy of Keynes’s General Theory of Employment, Interest and Money.

Stefan Isaacs
Pearl Jam – Alive
Foo Fighters – Pretender
White Stripes – Seven Nation Army
Beatles – Hey Jude

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A chart that may make you nervous if you’re long of government bonds

Government bond investing used to be about analysing and assessing economic data.  Judging by the last few months, not any more.

At the beginning of June, I argued here that US economic data was a horror show and was falling off a cliff, and bond investors (and risk assets generally) seemed not to have noticed.   The chart I posted back in June stoked quite a bit of reaction, with the main poin…

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The 2011 Bond Vigilantes Christmas Quiz – the answers and the winners

Thank you for another bumper haul of Christmas Quiz entries.  This year’s winner is Dan Looney, with 20/20.  Dan will be familiar to those M&G clients in the South West of the UK, as he used to cover that region for us a decade or so ago when he worked here.  He was genuinely first out of the hat – the others in the full house club are Richard Sullivan, Sam Morton, Mark Dufton and Nick Tudball….

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A review of fixed interest asset class returns in 2011

The decorations are up, the presents are under the tree, and I’m starting to think of New Year resolutions. Yes 2012 is almost upon us. With that in mind, I thought it might be interesting to have a quick look at who have been the winners and losers in debt markets over the course of an eventful 2011.

As the below chart shows, investors in UK gilts have had a fantastic year. The top performing …

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Asia research trip – not so rosy

I went to Asia a couple of weeks ago to try to get away from the Eurozone and maintain some semblance of sanity, and to try to figure out what’s going on in the continent that has driven global economic growth in recent years.

Escaping the Eurozone crisis was of course impossible, since the fact is that Asian ‘decoupling’ is a myth and the Eurozone is the most obvious source of a global economi…

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Economical With The Truth – Christmas Naivety

It’s over 4 years since the financial crisis began, and by now you would have thought that we would understand all the factors that drove the building of, and since 2007, the destruction of the foundations of world economic growth. Over the last few weeks the events have been analysed by a series of economic programmes on the BBC.

Not surprisingly, many of the players, the mistakes, the events …

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Debunking myths in the financial system- an annual review

Last week saw Citigroup’s credit conference & an opportunity for investors to catch up with a number of European high yield issuers. For a number of companies the message continues to be one of uncertainty, not least with regard to their banking relationships.

Back in 2008 Richard & I blogged about companies drawing down on bank lines (see here). Companies like CIT were doing so as they were fi…

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The 2011 Bond Vigilantes Christmas Quiz

Here’s the 5th annual Bond Vigilantes quiz.  Twenty questions.  The closing dates for entries is midday on Friday 16th December.  Please email your answers.

Given a doubling of our readership over the last year from 6,000 separate visitors per month to 12,500+ we are more than doubling our prize pool.  However, as it’s all about the glory of victory we will be donating the top prize of £200 to …

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